[PeterisP]

In general, elimination of uncompetitive companies is one of the important tools that make the economy strong and prosperous.

If some system (company, branch, industry niche, product line - in different scales) in the economy is weak and inefficient, then simply allowing it to operate as-is will be a constant drain on the society, and artificially supporting/subsidizing it will hurt the people/companies who are either doing the same thing better, or doing some different, better thing.

On the other hand, ripping an inefficient company apart as the 'sharks' do - that is a way to reallocate all those resources (subsidiaries, employees, capital, buildings) to other places that will make a better use of them. The whole reason why large companies exist is because it's a way to get 2+2=5, so to speak. If some company achieves 2+2=3, then tearing it apart to get two 2's out of it is a valuable service for the financial ecosystem.

Lack of such 'sharks' increases short-term stability, but at the cost of having a lot of resources tied up in inefficient places; this is considered one of major factors why planned/command economies tend to fall behind to market economies - simply because they tend to leave uncompetitive businesses alone instead of agressively dismantling them.

[eru]

And in this case, this whole fiasco might actually be partly to be blamed on lack of more sharks: it was not and is not possible to short stocks of Dick Smith.